I.

A short history of Gulf Finance House

Gulf Finance House (GFH) is one of the most successful and innovative
Islamic investment banks in the Middle East. GFH specializes in the
identification and development of initiatives that unlock opportunity and
accelerate economic growth. With a focus on the conception and delivery
of high value economic infrastructure projects currently valued at over US
$20 billion GFH is set for another watershed year (GFH official website).

GFH pursues a unique business model that consistently outperforms the

market, delivering high returns on client equity in successive projects as
evidenced by the 61 % increase in profits to US $340 million during 2007.
The GCC investment community holds GFH in high regard and continue to
demonstrate the faith they hold in our ability to maintain a pipeline of
high value initiatives.

GFH has several product lines, ranging from retail banking up to high-
level investment banking. However, the current thrust of the business lies
with its high value projects, which are both extremely visible as well as
beneficial to the communities where these are located.

II. The focus of this paper

The author has been given the freedom to choose the thrust of this paper;
and as such, this paper then focuses on operations management
improvement and implementation.

However, with such a broad topic, it would be best for subdivisions to be

delineated, thereby creating a more profound appreciation of the specific
application of the theories discussed in the classroom.

A. Introduction

Obstacles facing companies in today's hyper-competitive global

markets are seemingly more complex than ever, to the point that
managers must rethink many of the basic principles of good operations
management, (Hayes, R. et al, 2004). Operations management is a
systematic process of managing routine and non-routine operation and
maintenance tasks in order to achieve desired results (Arasmith, S. et
al., 2004).

Based on what has been mentioned organizations today must be able

to deal with their growing complexities in management using effective
Operations management. Gulf Finance House, is not an exemption, in
order to compete in the ever changing and ever challenging business
world operations management must be employed.
 The following discussions, presents strategies on how GFH implements
operations management in its organizational challenges, which are
beneficial to the company.

B. The Problem encountered by the organization

At the onset, it must be understood that GFH encounters several

problems all throughout the organization and all throughout its product
line. However, in the interest of brevity and this paper, only a specific
problem will be tackled.

The very nature of investment banking lends itself to a project-based

operational environment, thus increasing the complexity of the tasks
themselves, as well as the requirements on the personnel involved in
each project.

The problem is simply said: What are the processes required in order
to support the development of products and services that meet the
requirements of the project?

However, the problem is magnified by the number of concurrent

projects and further made more difficult by limited resources and the
extent of the company’s infrastructure. Dr. Wong (2007), in the
instructional module, points out the fact that investment banking
requires a larger amount of product (and coincidental process) variety
and coordinating a variedly skilled support workforce.

Specifically, the problem lies not solely in creating the desired product
variety, but also in the availability of qualified skilled personnel and
structuring of their tasks in order to maximize the current skill set
while allowing for further growth.

Operational Management plays a significant role in this case through

process design as well as job design. The module acknowledges this
fact by highlighting the relationship between these two (Wong, slide
71). Additionally, OM theories are applied to make available all the
necessary inputs required to complete a project, within the specified
time and budget (Cohen, M. A. and H. L. Lee. 1989)

C. Analysis of the Problem

It would be easy to dismiss the problem as one simply caused by the

lack of skilled personnel or the lack of commitment, but there is more
to this problem than shortages or absenteeism. This is in itself not the
cause, but a complicating factor that highlights the underlying
problem.
In the several projects of GFH, there have been several instances
wherein the company has been tasked to manage the entire project,
from design all the way to completion, including all related supply and
value chains.

The heart of the problem lies in the specific design of the processes
and supporting jobs for each project among a plethora of other
projects. While customization may be strength of the GFH portfolio, it
also brings its share of pitfalls and constraints.

Each project is in itself unique, even though designs may be shared,

the circumstances and very nature of the project would set it apart
from the rest. In this sense, creating a project would also mean the
creation of tasks that are unique to it.

It must be made clear that GFH is not involved in the actual

construction of the infrastructure projects; rather, it plays the role of
both broker and client at the same time. And in all cases, GFH also
plays the part of service and product provider to its own clients,
lending itself to the application of vertical integration.

Operations Management, in each individual case, is then tasked to

create supporting work methods, drafting of procurement policies and
corresponding standards, and the design of the supply chain in order
to ensure that the project will meet its deadline. With this perspective,
it may be as well possible for each project to have its own set of
operations management processes, policies and guidelines.

The very cause, then, is in the lack of a set of standardized procedures

and common work processes that are needed to ensure that the
necessary resources are scheduled and allocated properly across the
different endeavors. The problem does not lie with the operations
management in an individual project; the problem lies in the
operations management of the collective projects at the back
office level.

The coordination of several disparate tasks over multiple concurrent

projects would make for a herculean task of monitoring, tracking and
reporting the progress in each, and not to mention the task of
allocating and rotating key resources among and between each
project. Back office tasks concerned with the coordination and
allocation of resources usually conform to the project, instead of the
opposite.

As mentioned earlier, this is further complicated by the inclusion of

human factors into the project itself. In the case of GFH, several other
unrelated factors leading to the shortage or unavailability of key
 human resources only serve to underscore the lack of standardized
procedures and common work processes.

Reliance on key human participants concentrates responsibility and

accountability on these individuals, and the subsequent unavailability
of a single key person would cause a cascade of delays and/or failures
on the dependent processes and personnel.

Other complicating factors would be the geographical and temporal

distribution of the projects, as distance and time zones would also
have to be factored into the complexity of the entire projects team.
For example, multiple construction teams in different time zones would
have to coordinate with back office operations in a different time and
place, and then consequently require design supervision or executive
approval from individuals in a different geographical region and time
zone.

D. Prospective Solutions

The simplest approach would be to manage each project separately

and autonomously, but this would entail much more manpower and
financial resources. This would also create widely varied processes that
will make it difficult for management to monitor and report on
progress. Also, this would make operational management conform to
each of the individual projects, which then makes it more difficult for
coordination.

Even though each project may be unique, the core tasks that need to
be accomplished by the back office in each remain essentially the
same. Infrastructure projects may differ in design and location, but the
tasks needed to initiate, plan, develop and operate the project share
more commonalities than would initially appear (Carter,M 1997-2008).
Simply stated, the common core tasks of each project should conform
to a standardized back office operation, as operations management
enables better coordination between core businesses, by employing
scientific methods and techniques to predict future requirement, both
qualitative and quantitative (Cooper, M. C., and L. M. Ellram. 1993)

This has to be taken with a grain of salt; the conformity to the back
office operations by project management should not be based solely
on the internal workings of the back office. There should be a
compromise point for all the commonalities between projects and the
back office. In many mega projects, Operations Management involves
the setting up of effective control measures in the initial stages. This
helps to assess the performance of the installed systems and
components. The main aim is to ensure that the project has been
executed as planned and has the capacity to deliver the predicted
results (Tandem,1996).
 To this effect, standardization of tasks, the creation of commonalities,
and the modularization of work of each entity involved should be the
proper approach. Proper job design and work organization are key to
understanding the commonalities that exist across the different
projects, and would serve as a basis for the work assignments for
subsequent ones. Inasmuch as the back office provides support, that
support should not blindly conform to project management nor should
project management blindly conform to the processes of the back
office, as another important aspect of OM is coordination. It strives to
achieve better coordination between the various entities related to the
project. These include the suppliers, project managers, site engineers,
technicians and others (Schwarz, L. B. 1981).

Moreover, though it may be frowned upon, a kind of redundancy of

work should be implemented; rather than using the term redundancy,
a system of shared responsibility and knowledge must be put into
place in order to alleviate the effects of other complicating factors. In
essence, the sharing of responsibility and knowledge across several
members of a team reduces the reliance on any one single person
(Tandem, 1996).

Doing such allows GFH management to proverbially hit two birds with
a single stone, as understanding the commonalities allows for proper
process and job design at the support level.

Documentation of the operational processes is also of paramount

importance. Operations documentation is online or hard-copy
information the staff needs to run the systems, including manuals,
contracts, standards, procedures, service-level agreements, online
help files, system configuration diagrams, schedules, and recovery
plans. This documentation will prove invaluable in instances wherein
problems are encountered, as well as when new staff members are
brought on board to join projects in mid-stream.

Lastly, one of the highlights of operations management is the

development of contingency plans, in order to provide a heads-up in
the case of untoward incidents. In the case of GFH, contingency plans
are not only limited within a single project, but extend across the
entire project portfolio, including the shared infrastructure between
each project.

E. Considerations in the Implementation of the Prospective

Solutions

There are several real dangers in trying to implement the prospective

solutions, and each of these shall be discussed briefly.
1. Spreading of human resources too thinly. While it may be desirable
to have a single, well-coordinated team handle all of the concurrent
projects, one has to understand that people, no matter how smart
or talented they may be, can only handle at most two large and
complex projects at a time.

One may be tempted to allocate one project management team, for

example, into several infrastructure projects. In fact, several small
projects may as well be more tedious that one single large project,
as attention and time has to be distributed in such a way that no
project would suffer.

Proper job design (Wong, 2009) not only involves the tasks that
one must perform, but also the environment and circumstances in
which and by which the jobs will be performed.

2. The scheduling of resources. One project requires the careful

monitoring of the resources allocated to it; but in the scenario
involving several concurrent projects, the juggling of resources
becomes an even more difficult task.

In an ideal world wherein resources may be allocated solely to one

project, several concerns such as the scheduling of financial
resources is negligible, as it is only limited to one. But in the case
of GFH where several projects share a common financial backbone,
the scheduling of receivables and payables among and between the
different projects is a major cause of concern.

3. The under-appreciation of how the back office supports large high-

profile infrastructure projects, and vice versa. One of the key
problems for operational and strategic managers is letting
employees and first-level management appreciate the
interdependence and interrelationship of the back office to the
flagship projects, as well as letting project management personnel
understand and appreciate the standardization and support of the
back office personnel (Gaither,N. 1987).

Traditionally, the back office of banking institutions has been linked

to the image of retail banking, while project management in
investment banking remains separate. In the case of GFH, where
retail banking takes a back seat to investment banking, the back
office takes a more pre-eminent role in the support of such high-
profile endeavors. Developing a central operational strategy to
accommodate both and find a means to get all employees on board
is a more delicate and difficult task than appears, but is also
beyond the scope of this paper.
 4. The design of the contingency plan. A balance between economics
and contingency has to be struck as it would become immoderate,
in terms of economics and resources, to create contingency plans
for each project and allocate resources to each. It would also be
against best practices for all projects to share only one contingency
program, as this may reduce the effectiveness and responsiveness
of recovery teams in the event of failures in one or more concurrent
projects.

5. Flexibility to accommodate changes. In the world of investment

banking, changes in the economic conditions would thereby force
GFH to conform to these aforementioned changes. This is more
evident now as the world faces the global financial crisis, where
projects and financing become more sensitive to any small
fluctuation.

Changes may also be introduced by the changing needs and

demands of the clients and their willingness to continue with the
current projects. Changes to other entities in the value chain, such
as contracting and design companies, affect GFH quite significantly.

As such, the back office operations of GFH should be able to cope

with the changes in a responsive and cost-efficient manner. The
design of operational processes should allow for enough flexibility
to accommodate the changes in and to any one of the entities
involved in the GFH value chain while allowing for consistent
operational efficiency.

F. Perceived Benefits

It must be understood that there is no one single way of tackling and

solving the problem, as there is no one best way to do anything
(Tandem, 1996).

Operations management is thus the day-to-day implementation of

business strategies and tactics on the ground. It seeks to reduce costs,
enhance quality of products and services, and thus gain a competitive
advantage. It calls upon different branches of engineering and even
mathematical modeling to develop the best operating environments
and practices. (Thackhapilly, G. 2009)

By finding a compromise point between project management and the

back office, the standardization of tasks will provide a common, stable
platform that will provide efficient and effective support to project
management. Further refining these support processes to provide the
same kind and type of services despite the type of project involved
will, in the long-term, enable project managers to have a stable and
consistent base for all their prospective and current projects.

Moreover, the information gathered from understanding the operations

of the back office with respect to supporting project management will
provide operational strategy planners with a more realistic idea of
what actually happens at this convergence point. This, in the hands of
empowered management, would assist greatly in the development of
the over-all corporate strategy of GFH.

In closing, this paper would like to borrow the words of the Economist
Intelligence Unit (2007), by stating that:

“Future success requires inspiring leadership from men and

women who believe in the power of operational innovation. But
it also requires better training of managers in operational skills.
Unfortunately, operations are often perceived as being less than
glamorous because they are frequently associated with cost
reduction rather than revenue growth. This is a shame—and,
perhaps more to the point, a misperception.”

And finally,

“Companies need to think about their operations in a new way.

They should look at the extraordinary examples of firms like
Dell, Toyota and Southwest Airlines, and realise that these
businesses are beating their competitors not so much because
of what they do but because of how they do it.”
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